There are several values that you need to be aware of when it comes to Atlanta Real Estate.
- Market Value – This is the price that a ready willing and able buyer is willing to pay for the property today. We determine market value primarily from the recent sold comparable sales. A comparable sale is a sale that generally was made within the last 3-6 months or less, is within a mile of the subject property, and is similar in style, size and attributes. Of course what “similar” means can be interpreted in a number of different ways, but generally speaking, the square footage of the home must be within 20% of the subject property to be considered similar. Adjustments are made up or down to this value depending the degree of upgrades for example, if the basement is finished in the subject property but not in the comparable sold property, we might attribute more value to the subject property. Your agent will pull the comparable solds from the MLS and discuss the amenities and attributes. For the most part, properties outside of the immediate neighborhood are not considered unless no recent solds in the immediate neighborhood can be found.
- Appraised Value – This is the value that a certified property appraiser assigns to the house. The main difference between what an appraiser says a property is worth and the Market Value of the property is that an appraiser may say a property is worth a certain price, but that doesn’t mean that a ready willing and able buyer is going to be willing to pay that price. Often times, a seller will present an appraisal that was used for a home refinance to try to convince a buyer that they should pay that much, but if the buyer is the only buyer interested and isn’t willing to pay the appraised value for the house, than the market value is what the buyer says it is, not what the appraiser says it is.
- Tax Assessed Value – This is the value that the tax assessor assigns to the property. As a home-owner, you want this as low as possible because this is what your taxes are based on. You can find this value in the tax records which are public records, but for all intents and purposes, this number should never be relied on when trying to determine market value or an offer price. In Atlanta Metro, tax assessed values are notorious for being way off, so basing an argument of value on this will make you look like an amateur and you will not be taken seriously by the seller.
So which value do you use when determining what the “Real Value” is? The answer is the Market Value, which is also called the Fair Market Value (FMV). Your agent will research the comparables and put together a Comparable Market Analysis to help you determine what the market is saying this home is worth. They will include Active Listings and Pending Listings as well. The Active listings are relevant because sometimes you will have comparable Active Listings in the neighborhood that are priced below what the comparable sold listings sold for. This is an indicator that prices are falling in that neighborhood as its safe to say that the next sale(s) will be less than previous solds. Pending listings are the listings that are under contract and waiting to close. Agents generally do not make public what the agreed upon contract price is before the deal is closed but a pending listing tells gives us an idea of what list price fetched an offer and from there, the agent will do their best to estimate around where that sales price might end up. The most relevant and relied on comparables however should be the sold comparables.
From here, you have determine what the home is worth to you, and what price you will be happy with.